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Exclusions Excluded

Quite a few people can improve their life insurance or income protection policy without spending a cent. Have you ever looked at your life or income protection insurance policy note – the piece of paper you get at the beginning showing the amount insured, the premium and, importantly, any loading or exclusions? When I do a review of a new client or give a second opinion for somebody who isn’t a client, I often find that the policy has exclusions or loadings the client knows nothing about.

That can be simply forgetfulness or that can be because the insurance agent never made it clear that there was an exclusion or loading – he or she may have simply asked the client to ‘sign this’ to finalise the application and the client didn’t realise they agreed to a loading or exclusion. What is an exclusion?

If, at application time, you had a prior history of, say back pain, the insurance policy may exclude ailments of the lower back or the entire spine, or, if you have been to counselling recently, the insurance policy may exclude any mental illness cover. The reason is because a history of back pain means that back pain is much more likely for that person than for other people, making it impossible to insure for back pain with that insurer. So, what can be done about this?

Well, many exclusions only apply for a limited time but it is up to the client to go to the insurance company and ask them to remove that exclusion and most clients don’t know they can do this or forget to do it. For example, the insurance company may allow for a review of the back pain exclusion after 2 years and, if there has been no back pain and no back pain treatments in that time, then the insurance company may waive that exclusion, making the insurance policy that much more valuable. The same may apply for a loading – smokers typically pay 70% extra and so do very overweight people (and professional boxers). If a client stopped smoking for a year then they can apply to pay the lower non-smoking rate. The same is true for the weight and a retired boxer will also pay less. Removing exclusions is one of the more generous things that insurance companies do and I urge you to take a good look at your policy note – ask your insurance company for a copy if you don’t have it – and you are welcome to call me to see whether we can change or remove the exclusion or make any of a number of other improvements.

Christoph Schnelle insurance advice


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